BUSINESS, INNOVATION AND SKILLS

Consumer Credit Review

Edward Davey: I have, together with the Financial Secretary to the Treasury, published the Government’s response to the consumer credit aspects of the consumer credit and personal insolvency review, “Managing Borrowing and Dealing with Debt”, launched jointly by BIS and HM Treasury. My statement of 19 July, Official Report, columns 89-90WS, provided the Government’s response on the insolvency aspects of the review.
	The response builds on a number of coalition commitments to help consumers make better financial decisions when borrowing money and deals specifically with:
	unfair bank charges;
	introductory discounts when taking out a store card;
	interest rate caps on credit and store cards; and other consumer credit issues, including high-cost credit.
	Our vision is twofold. First, we want all consumers to be empowered to make better choices for themselves. Consumers should be free to borrow if that is what they decide is in their best interest. It is not for the Government to pass judgment on whether a particular product is good or bad but, in line with the coalition principles of freedom, fairness and responsibility, we want to provide consumers with the tools they need to make informed decisions. Secondly, we want to ensure there is a safe and fair regulatory framework for both credit and personal insolvency. These frameworks must protect vulnerable consumers, particularly those at risk of falling into or those already in financial difficulty and drive rogue companies out of the market. Responding to consumer concerns about the lack of control and transparency over bank charges, the Government have driven forward a voluntary agreement which will apply to all full-facility current accounts offered by the major personal current account providers. Under the new agreement, over 85% of personal current account customers will benefit from measures to make charges for unarranged overdrafts clearer, fairer and more manageable.
	This will include an option for consumers to receive alerts when their balance is low so that they can take action to avoid a charge; consumers will know by what time they need to make a payment into their account to avoid charges; and they will no longer be charged for going over their limit by a small amount. Balance alerts will be available from March 2012, with full implementation of the other measures by March 2013 at the latest.
	These measures come in addition to commitments already made by the industry to increase transparency, including annual statements detailing charges incurred so that consumers can see how much their account costs them over the year, and from September 2013 a new guaranteed switching service which will give customers the confidence to switch accounts quickly, safely and without hassle. This will mean that consumers can
	make sure that they are getting a good deal from their bank. Together, all these measures will provide a powerful way for consumers to hold their banks to account.
	On store cards, respondents to the review were most concerned about customers being tempted into expensive credit by retailers offering discounts on their purchases at the time they take out a store card. Following negotiations with the Government, industry has agreed to end this practice as well as introducing other measures to improve the way store cards are offered, including a good practice training scheme and a ban on direct commission for sales staff.
	The Government will not be introducing a cap on interest rates on credit and store cards. Following the review, the evidence showed that a cap would not be in the best interest of consumers as pricing some consumers out of the market could force individuals to seek unregulated or high-cost credit.
	What was clear from the review were the real concerns around the high-cost credit market and the impact that using this type of credit can have on vulnerable consumers. To address these concerns, the Government are pleased to have appointed Bristol university’s Personal Finance Research Centre (PFRC) to carry out research into the impact of introducing a variable cap on the total cost of high-cost credit that can be charged in the short to medium-term high-cost credit market. The Government have also started negotiations with industry to introduce improved consumer protections in codes of practice for payday lenders and other instant credit providers. In addition, the Government are working to improve access to credit unions which can provide a real alternative to high-cost credit.
	Positive action from industry to address real consumer concerns has wider-reaching benefits. By working with industry we can make changes that improve things for consumers far more quickly than legislating. As we stated in the call for evidence, we will regulate where necessary but our strong preference is to promote more responsible corporate and consumer behaviour through greater transparency, competition and by harnessing the insights of behavioural economics.
	Finally this response completes the announcement we made in July when we set out additional measures to assist consumers in difficulty, including a consultation on improving access for bankrupts to basic bank accounts (published on 17 November) and working with industry to improve standards in debt management plans. In addition, on 7 November we published a consultation seeking views on reforms to the route into bankruptcy (and compulsory winding up) to streamline the process and to ensure that the court focuses on dispute resolution.
	The package of measures announced in this response will deliver real benefits for consumers that can be achieved while minimising the regulatory burdens on business. We are placing copies of the document in the Libraries of both Houses.

TREASURY

Tax Avoidance

David Gauke: The Government are fully committed to tackling tax avoidance and will take necessary steps to protect the Exchequer and maintain fairness in the tax system.
	The Government published “Tackling Tax Avoidance” at Budget 2011 which outlines a more strategic approach to addressing avoidance by placing the emphasis on preventing avoidance before it occurs. By building in sustainable defences to avoidance we will reduce the need for immediate changes to legislation once an avoidance risk has arisen, or for HMRC to challenge avoidance once it has happened.
	In December 2010, I asked Graham Aaronson QC to lead a study that would consider whether a general anti-avoidance rule (GAAR) could deter and counter tax avoidance, while providing certainty, retaining a tax regime that is attractive to businesses, and minimising costs for businesses and HMRC.
	I have now received Mr Aaronson’s report and have arranged for it to be published today on HM Treasury’s website at:
	http://www.hm-treasury.gov.uk/d/gaar_final_report_111111.PDF.
	Mr Aaronson has recommended a narrowly focused GAAR which should initially apply to the main direct taxes—income tax, capital gains tax, corporation tax, and petroleum revenue tax, as well as national insurance contributions. The report sets out in detail how a GAAR could be introduced, and includes an illustrative draft rule. It also includes a summary of the views of representative bodies in the tax sector.
	The Government will consider the report in detail and the extent to which the proposals could add to HMRC’s existing legislative and administrative approaches and further reduce levels of tax avoidance. The Government will discuss the implications of the proposed rule with business and tax groups and respond fully at Budget 2012, setting out their plans for further, formal public consultation, if appropriate.
	I will place a copy of the report in the Library of the House.

Counter-Terrorism Act (Financial Order)

Mark Hoban: The Government have today laid before the House an order under the Counter-Terrorism Act 2008 containing a direction requiring UK credit and financial institutions to cease all business with banks incorporated in Iran and their branches and subsidiaries. This means that UK credit and financial institutions are prohibited from entering into transactions or business relationships with these entities and continuing existing transactions and business relationships with them, unless licensed to do so by HM Treasury.
	The Treasury is satisfied, as required by the Act, that activity in Iran that facilitates the development or production of nuclear weapons poses a significant risk to the national interests of the United Kingdom. The November board report of the International Atomic Energy Agency (the UN body charged with monitoring Iran’s activities and ensuring that no nuclear material is being diverted to non-civilian applications) highlights the reasons for the Government’s serious and ongoing concerns about Iran’s nuclear activities. The IAEA report sets out the agency’s concerns about
	“possible military dimensions to Iran’s nuclear programme”.
	In particular, the information available to the agency indicates that Iran has carried out the activities that are relevant to the development of a nuclear explosive device. The report notes that
	“while some of the activities identified have civilian as well as military applications, others are specific to nuclear weapons”.
	The Government view these developments with the utmost concern.
	The case for action is underlined by the recent calls from the Financial Action Task Force for countries to apply effective countermeasures to protect their financial sectors from money laundering and financing of terrorism risks emanating from Iran. The FATF (the global standard setting body for anti-money laundering and combating the financing of terrorism) renewed these calls with urgency on 28 October 2011 and noted its particular and exceptional concern about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system.
	In light of these risks to the UK’s national interests, I consider it a proportionate response to require the UK financial sector to cease all business relationships and transactions with Iranian banks and their branches and subsidiaries, including the Central Bank of Iran. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes as companies carrying out proliferation activities will typically require banking services. Any Iranian bank is exposed to the risk of being used by proliferators in Iran’s nuclear and ballistic missile programmes. Experience under existing UN and EU financial sanctions against Iran demonstrates that targeting individual Iranian banks is not sufficient. Once one bank is targeted, a new one can step into its place.
	As they relate to an important global financial centre, UK restrictions will have an impact on the options available to Iranian banks. This will make it more difficult for Iranian banks to utilise the international financial system in support of proliferation-sensitive activities. It will protect the UK financial sector from the risk of unwittingly being used to facilitate activities which support Iran’s nuclear and ballistic missile programmes. UK action of this nature signals to Iran and the international community that we consider this risk to be significant.
	These actions are being taken in co-ordination with other partner countries, who will make their own announcements separately.

Northern Rock plc

George Osborne: On 15 June 2011 I announced that I had put Northern Rock plc up for sale.
	The bidding process has now finished and on 17 November 2011 I announced the sale of Northern Rock plc to Virgin Money. The Financial Secretary is also updating the House on the sale of Northern Rock plc today.
	The deal was reached following an open, transparent and competitive bidding process. It is expected to complete on 1 January 2012, pending European Commission merger clearance and Financial Services Authority approval.
	This statement provides full details of the consideration HM Treasury will receive for the sale:
	Cash: HM Treasury will receive cash of £747 million on completion and around an expected further £50 million cash in the second quarter of 2012 relating to the net asset value of Northern Rock plc upon completion.
	Tier 1 Capital Notes: Virgin Money will issue to HM Treasury on completion Tier 1 Capital Notes with a par value of £150 million and an annual coupon of 10.5%. The terms of these notes have been designed to be compliant with current GENPRU requirements and the expected requirements of forthcoming CRD4 regulations which will implement Basel III guidelines into European law. Accordingly they include features such as principal loss absorption and discretionary interest coupons. Virgin Money has indicated that it intends that these notes would be exchanged, or purchased by the acquirer, upon an Initial Public Offering or sale, without reducing the amount and quality of the firm’s capital resources, which would allow HM Treasury to exit its investment.
	Additional cash consideration: HM Treasury will receive additional cash consideration payable upon Virgin Money delivering a future profitable Initial Public Offering or sale in the next five years. The maximum payment would be £80 million if this occurred in 2012; £70 million in 2013; and £50 million in 2014 to 2016 inclusive.

COMMUNITIES AND LOCAL GOVERNMENT

Housing Reform

Grant Shapps: I am today announcing the publication of “Laying the Foundations: A Housing Strategy for England”. This strategy sets out the Government’s plans to support social mobility and get the housing market—and in particular new house building—moving again.
	This is vital for our economic growth—but more importantly, it is essential to the hopes and plans of young people, families and older households across the country. We know we will not achieve this by attempting to control the market from Whitehall. The system of setting top down targets for housing, vast amounts of planning guidance and excessive regulation contributed to the lowest level of house building since the 1920s. House building in 2010-11 was 29% higher compared to 2008-09, and compared to 2009-10, it was 17% higher (103,750 starts in 2010-11; 88,690 in 2009-10, and 80,550 in 2008-09).
	The strategy sets out the immediate action we are taking to get the housing market moving again.
	We are launching a new build indemnity scheme to provide support to potential home buyers;
	We are reinvigorating the right to buy—to support social tenants who aspire to own their own home, by raising the discounts to make it attractive to tenants across England.
	We are matching this with a commitment that for every additional home bought under right to buy, a new affordable home will be built;
	We are getting building moving again with a new £400 million “Get Britain Building” investment fund;
	We have established a new £500 million growing places fund which will support infrastructure for housing and economic growth;
	We are freeing up formerly used public sector land with capacity to deliver up to 100,000 new homes—with build now, pay later deals on the table to support builders who are struggling to get finance up front; and,
	We are consulting on a proposal to allow reconsideration of those planning obligations agreed prior to April 2010 where development is stalled. Some planning obligations negotiated
	at the height of the economy boom now make the site economically unfeasible—resulting in no development, no regeneration and no community benefits at all.
	We are also taking action to lay the foundations for a more responsive, effective and stable housing market in the future.
	We will be providing more support for local areas that want to deliver larger scale new development to meet the needs of their growing communities—with a programme of support for locally planned large scale development;
	We are putting in place strong, new incentives for housing growth through the new homes bonus, community infrastructure levy and the proposals for local business rates retention;
	We have consulted on simplifying planning policy through the draft national planning policy framework;
	We are supporting a self-build revolution through a custom build homes programme to support and encourage more individuals and communities to build their own homes—including making available up to £30 million of new funding to support provision of short-term project finance on a repayable basis; and
	We are giving communities new powers to deliver the development they want through Community right to build.
	We are also supporting choice and quality for tenants by
	supporting growth and investment in private rented housing, as the key to increasing choice, access and standards in the sector, while also working with local authorities to tackle the worst properties;
	creating more opportunities for council tenants to have their say—with tenants with an arm’s length management organisation landlord given new opportunities to influence how their homes are managed;
	introducing a radical programme of reform of social housing through the Localism Act, changing the way people access social housing, the types of tenancies which are provided and the way the homelessness duty is discharged, though not the duty itself which continues to provide among the best homelessness support in the world;
	doing more to tackle fraud and tenancy abuse—we will give local authorities the tools to identify and recover properties that are being used unlawfully; to charge more reasonable market orientated rents from people earning very high salaries; and to prevent people who own a suitable home from seeking social housing too; and
	considering how we can encourage more affordable housing—supporting greater innovation and competition between social landlords—including encouraging new private entrants into the social housing market and considering innovative new approaches to funding affordable housing in the medium-term.
	We are also making better use of existing stock—bringing more empty homes and buildings back into use. The housing strategy sets out our strategy for tackling empty homes, including £100 million funding to bring empty homes back into use as affordable housing and changes to council tax to help tackle empty homes and bring them back into productive use and an additional £50 million of funding to tackle some of the worst concentrations of empty homes.
	We remain committed to providing appropriate support, protections and opportunities to struggling households and to making the best use of social housing to provide stable homes for those who need them most. We have prioritised protection for the vulnerable in last year’s spending review and have established a ministerial working group to tackle the complex causes of homelessness. We are also setting out a new deal for older people’s housing, with a better offer to support older people to live independently for longer.
	This strategy is not just about building more homes. We know that the quality, sustainability and design of housing, along with sufficient funding to support growing communities is just as important as how many new homes are built and that getting this right is crucial if communities are going to support new homes.
	I am also issuing today a consultation on the powers which will deliver a devolved system for financing council housing from next April. Self-financing will deliver a long term, securely funded, future for council housing and give councils the freedom they need to be innovative in meeting local needs.
	Copies of the strategy and consultation on legal determinations to implement self-financing will be placed in the Library of the House and published online at www.communities.gov.uk

FOREIGN AND COMMONWEALTH AFFAIRS

Afghanistan Monthly Progress Report

William Hague: I wish to inform the House that the Foreign and Commonwealth Office, together with the Ministry of Defence and the Department for International Development, is today publishing the 11th progress report on developments in Afghanistan.
	The Bonn conference on 5 December provides President Karzai with an opportunity to set out his vision for an inclusive settlement. It is also an opportunity for the international community to reiterate its long-term commitment to Afghanistan.
	The summer fighting season is ending and it has been a hard year for the insurgency. The numbers of both attempted and executed attacks were lower than during the corresponding period last year, continuing the trend observed over the summer. Despite considerable efforts, insurgents failed to re-establish themselves in areas in the south from which they had previously been displaced. High profile attacks in Kandahar early in October and in Kabul at the end of the month affected Afghan and international perceptions of security. However, Afghan national security forces (ANSF) disrupted many attempts and responded effectively and professionally to those that got through. Overall, the performance and operational capability of the ANSF continued to develop: they are on track to achieve their October 2012 growth objective of 352,000 and work continued to ensure that the quality of the forces steadily improves.
	The United Nations Office on Drugs and Crime’s (UNODC) 2011 Afghan opium survey reported a year on year increase in cultivation of 7% nationally (from 123,000 hectares to 131,000 hectares). However, the increase should be interpreted in the context of a difficult economic backdrop of opium prices (which have doubled in the last year to the highest level since 2004) and that the figures are 32% lower than in 2007 (which saw 193,000 hectares cultivated).
	With UK support, the Government of Afghanistan continued to make important progress on revenue collection and budgeting. The Government confirmed their best ever first quarter performance for revenue collection to
	date, bringing it in line with neighbouring countries including Bangladesh and Pakistan. Meanwhile, provincial Governments have been working with the Ministry of Finance to ensure that for the first time, local priorities are reflected in plans for next year’s national and provincial budgets. This will improve the Government’s ability to deliver vital basic services to the Afghan people.
	During his recent visit to Afghanistan, the Secretary of State for International Development launched an important new fund for Afghan civil society organisations. This will help them to engage better with the Afghan Government and hold it to account, for example on human rights and corruption.
	I am placing the report in the Library of the House. It will also be published on the Foreign and Commonwealth Office website (www.fco.gov.uk).

Post-Foreign Affairs Council and General  Affairs Council

David Lidington: The Foreign Affairs Council (FAC) and General Affairs Council (GAC) were held on 14-15 November in Brussels. My right hon. Friend the Foreign Secretary attended the FAC (foreign affairs). My hon. Friend the Under-Secretary of State for International Development attended the FAC (development). The UK Permanent Representative attended the GAC.
	The agenda items covered were as follows:
	Foreign Affairs Council (foreign affairs)
	The FAC was chaired by the high representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland. A provisional report of the meeting (both foreign affairs and development), and all conclusions adopted, can be found at:
	http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/126064.pdf
	Afghanistan
	Ministers agreed conclusions (see link) that approved a mandate for an EU co-operation agreement for partnership and development with Afghanistan. They also agreed to extend the EU police mission in Afghanistan (EUPOL) in principle until the end of 2014, and made a commitment to support Afghan efforts in strengthening policing and the rule of law beyond 2014.
	The Foreign Secretary stressed the importance of a clear vision for a future political settlement being set out by Afghanistan at the Bonn conference on 5 December. He also underlined Pakistan’s key role and the need for the EU to maintain momentum on engagement with Pakistan, as agreed by Ministers in the Foreign Affairs Council in July.
	Syria
	Ministers adopted conclusions (see link) and restrictive measures against a further 18 members of the Syrian regime and stopping all European Investment Bank loans. Following the FAC, the Foreign Secretary said:
	“I welcome the EU’s decision today to apply further pressure on President Assad’s regime, following the strong measures announced by the Arab League this weekend. The EU has listed a further 18 individuals involved in or supporting the regime’s activities, including military, security and intelligence officials leading military operations in Syria. In addition, the EU has moved to prevent any further disbursement of loans from the European Investment Bank to Syria.
	President Assad has ignored countless calls by the international community to put an end to the horrific violence in Syria. Since the Syrian regime’s claim to have agreed to the plan put forward by the Arab League on 2 November, violence has only escalated with a death toll of over 3,500 people since March. As long as the violence continues, we will continue to press the Syrian regime to bring an end to this killing”.
	Libya
	Ministers agreed conclusions (see link) welcoming the declaration of the liberation of Libya on 23 October. They encouraged the National Transitional Council to respect human rights in line with its constitutional charter.
	The Foreign Secretary emphasised the success of NATO’s military intervention. The three key actions for now were moving forward with EU support, engaging the tools of the neighbourhood policy and sending measured but clear signals on our expectations on human rights, including the rights of women.
	Tunisia and Egypt
	Conclusions welcomed the “historic” elections in Tunisia (see link). Baroness Ashton laid out support under way or ready to be negotiated with the new Government: agricultural liberalisation, “open skies”, a mobility partnership, a free trade agreement, and a doubling of funding in 2011 to €160 million. On Egypt, there was a brief exchange on elections due later this month. Ministers are likely to return to this at their meeting in December.
	Horn of Africa and Somalia
	Ministers adopted a strategic framework for the horn of Africa (see link). This will guide EU action in five areas: building robust and accountable political structures; contributing to conflict resolution and prevention; mitigating security threats emanating from the region; promoting economic growth, and supporting regional economic co-operation.
	On Somalia, Ministers adopted conclusions (see link) which expressed concern about the situation in Somalia, reaffirmed the EU’s commitment to support AMISOM and to continue the EU training mission for Somalia’s security forces.
	The Foreign Secretary set out the UK’s support for Kenyan action in Somalia, which he stressed should be done in co-ordination with the Transitional Federal Government and in compliance with international law. He also outlined proposals for an international conference on Somalia in 2012, announced by the Prime Minister on 14 November.
	Iran
	Ministers agreed conclusions (see link) expressing increasing concern about the possible military dimensions of the Iranian nuclear programme and the lack of progress with diplomatic efforts. They also raised the prospect of reinforced sanctions measures in December.
	Common Security and Defence Policy (CSDP)
	Over lunch. Ministers discussed current and possible future CSDP operations. The Foreign Secretary set out the UK’s substantial contribution to European defence, not least as the EU country with the largest defence budget. He also reiterated the UK’s long-standing opposition to the establishment of an EU Operational Headquarters. Baroness Ashton concluded that EU Defence and Foreign Ministers would discuss this further at their meetings on 30 November and 1 December respectively.
	Foreign Affairs Council (development)
	The EU Common Position for the Fourth High - Level Forum on Aid Effectiveness (HLF-4, Busan, 29 November  to  1 December 2011)
	The EU common position for Busan was adopted and received general endorsement from member states. Mr O’Brien stated the UK’s desire to see a clear focus on transparency, results and fragility and stressed the importance of ensuring Busan produces an ambitious outcome that engages broader development actors as well as traditional donors. This was endorsed by Commissioner Piebalgs and the High Representative Baroness Ashton.
	Ministers also discussed the issue of EU “joint programming”. Commissioner Piebalgs proposed a Busan initiative which launched joint programming in pilot countries. Mr O’Brien set out the UK’s concerns and made it clear that consultation on any list of countries and any form of EU co-ordination must be country-led, pragmatic and open to all donors, rather than led by Brussels.
	Horn of Africa
	Development Ministers addressed the humanitarian and development aspects of the horn of Africa crisis, continuing the discussion held by Foreign Ministers during the Foreign Affairs Council earlier in the day. Commissioner Georgieva praised UK leadership in the horn of Africa and called for a concerted long-term effort which addressed resilience.
	Mr O’Brien called for a sustained EU effort over 2012 with more member states providing support and highlighted the importance of engaging with Turkey, the Gulf states and other donors in an ambitious response based on need and resilience. Baroness Ashton concluded by endorsing Mr O’Brien’s message on the need for a holistic response and the importance of finding a political solution. This was supported by a number of member states. The Under-Secretary of State also confirmed that the UK would be hosting the Somalia conference next year. The announcement was met with wide approval from Ministers, Baroness Ashdown and the Commissioners attending.
	Future of EU Development Policy
	Ministers endorsed the recent European Commission’s (EC) communication on “Increasing the Impact of EU Development Policy: An Agenda for Change”. Mr O’Brien stressed the importance of establishing a results framework for EU aid and also reinforced the UK concerns on EU joint programming.
	EU Budget Support
	This item focused on the EC Communication on “The Future Approach to EU Budget Support to Third Countries”, which was broadly welcomed by Ministers. There was general agreement on the principle of differentiating aid—ensuring it is more focused on the poorest countries. Mr O’Brien stressed that decisions on budget support should be made in-country on a case-by-case basis, with non-EU donors and member states retaining full ministerial responsibility over funding decisions.
	AOB: G20 and Energy for All
	Limited time was afforded to these AOB points. Nevertheless, France highlighted the achievements of the French G20 Cannes declaration. Additionally,
	Commissioner Piebalgs stated that he would write to Ministers on his initiative on Sustainable Energy for All.
	General Affairs Council (GAC)
	The GAC was chaired by the Polish EU presidency (Mikolaj Dowgielewicz, State Secretary for European Affairs). A draft record of the meeting can be found at
	http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/genaff/126082.pdf
	Multiannual Financial Framework
	Ministers discussed the EU’s multiannual framework for 2014-2020. The presidency indicated that it would present a report to the European Council on 9 December. It stressed that this report would signal the end of the clarification stage, paving the way for negotiations to begin in earnest in January 2012 under the Danish presidency.
	The UK Permanent Representative set out the UK’s views. The current proposals were too high. The Commission needed to explore ways of replacing some current expenditure rather than adding more. Proposals to increase structural and cohesion funds as well as the Connecting Europe Facility were also too high. The UK could not support macro-fiscal conditionality on EU Budget funding due to the special position of the UK by virtue of protocol 15 of the treaties. Structural funds should be directed towards the poorest regions which are mostly located in the poorest member states. And the Commission’s proposals on the common agricultural policy needed to be substantially reduced.
	October and December European Councils
	Ministers reviewed the proposed agenda for the December Council which includes economic issues, energy and EU enlargement. Signature of the treaty on the accession of Croatia to the EU is scheduled for the margins of the December Council.
	During the discussion on draft European Council conclusions the UK Permanent Representative stressed the need to reflect earlier Council conclusions on ensuring the widest possible reduction of regulatory burden and the importance of trade as a driver for growth. The UK Permanent Representative welcomed the undertaking of President van Rompuy to update the European Council on the reflections of the euro area member states, but noted that October European Council conclusions had talked in more explicit terms about the integrity of the EU as a whole and the role of the 27 in any discussion on treaty change; and that the UK wanted to see that approach reflected here.
	Strategy for the Baltic Sea Region
	Ministers agreed conclusions (see link) which welcomed the European Commission’s report on the Baltic sea strategy which had been agreed by the General Affairs and External Relations Council in October 2009.
	I will deposit copies of this note in the Libraries of both Houses. And I will also continue to update Parliament on future Foreign and General Affairs Councils.

HOME DEPARTMENT

Protocol and Shadow Strategic Policing Requirement

Theresa May: A year from now the public within England and Wales will, for the first time, have been
	given a direct vote and say in how they and their communities are policed. The election of the first police and crime commissioners on 15 November 2012 will mark a step change in how policing is held to account. Communities will be able to voice their local priorities to a single, directly elected, individual; their police and crime commissioner.
	Police and crime commissioners will be powerful local representatives, able to set the priorities for the police force within their force area, respond to the needs and demands of their communities more effectively, ensure that local and national priorities are suitably funded by setting a budget and the local precept, and hold to account the local chief constable for the delivery and performance of the force.
	Strong and effective leadership will continue to be delivered by the chief constable and their command teams. Nothing within this step change of policing governance removes or calls into question the operational independence of the police service which remains the corner stone of all that is good about our way of policing by consent.
	To provide future safeguard to this principle I have today laid for the approval of Parliament a protocol which sets out how the new policing governance arrangements will work. It clarifies the role and responsibilities of police and crime commissioners (PCCs), the mayor’s office for policing and crime (MOPC), chief constables, police and crime panels and the London assembly police and crime panel. It outlines what these bodies are expected to do and how they are expected to work together to fight crime and improve policing. The protocol will therefore fundamentally underpin the key working relationships within the new policing landscape.
	Elections for police and crime commissioners for England and Wales will take place in November 2012. Within London, the mayor’s office for policing and crime will perform the equivalent role for the metropolitan police district. How these elected policing bodies work with, and interact with, chief constables and police and crime panels will be crucial to achieving success.
	It is my intention to issue the protocol to all chief constables, police authority chairs, their chief executives, the chief executives of all local authorities within England and Wales and the Welsh Government in order to assist in transition planning. The protocol will also be made available to all potential candidates for the Mayor of London elections in May 2012. It will then be made available to potential candidates for the office of PCC within each force area in England and Wales ahead of the first elections in November 2012.
	Within England and Wales, the changes in governance will take effect on 22 November 2012, with the exception of London. I am confident that with this protocol in place everyone will be able to work together effectively to drive down crime and to make our communities safer.
	I am also today issuing a non statutory “shadow” strategic policing requirement which sets out my view, as Home Secretary, of the national threats that the police must address and the appropriate national policing capabilities I believe are required to counter those threats. It respects the operational independence of the police, advising what, in strategic terms, they need to achieve but not how they should achieve it. I have placed copies
	of the shadow strategic policing requirement in the House of Commons Library and an electronic copy can be found at:
	http://www.homeoffice.gov.uk/publications/police/strategic-policing-requirement/
	I am issuing this shadow strategic policing requirement now to inform police forces’ and police authorities’ plans for 2012-13. Although it will not, at this stage, have statutory effect, it is my intention that it should help to drive improvements during the transition period to police and crime commissioners. I will look to all forces and authorities to have regard to this shadow strategic policing requirement when exercising their responsibilities.
	The shadow strategic policing requirement is a statement of the collective capabilities that police forces across England and Wales will be expected to have in place in order to protect the public from cross-boundary threats such as terrorism, civil emergencies, public disorder, cyber incidents and organised crime. It supports the development and maintenance of policing capabilities, often collaboratively between forces, and in support of the work of national agencies such as, in future, the National Crime Agency.
	I have consulted with ACPO, the APA, and other policing bodies and relevant agencies to develop the shadow strategic policing requirement. I will consult further on the experience of forces and authorities in using this shadow strategic policing requirement, and will then issue the statutory strategic policing requirement next summer in time for the election of police and crime commissioners.
	Both police and crime commissioners and chief constables will be required to have regard to the SPR from November 2012 in the conduct of their respective responsibilities.
	I would like to thank all of those from the police and the other bodies and agencies that have contributed to the drafting of the protocol and the shadow strategic policing requirement—their work has been invaluable.

JUSTICE

Judicial Appointments

Kenneth Clarke: The judiciary play a critical role in the administration of justice. It is therefore vital that we select candidates for judicial office on merit, through fair and open competition, from the widest range of eligible candidates.
	We consider that there is a need to address issues with the current systems. Those issues include: the length of time and amount of money it can cost to run a selection process; the degree of diversity in appointments; and the inflexibility of the Constitutional Reform Act 2005, which means even minor process changes require primary legislation.
	All of this supports the case for revisiting judicial appointments and today we have launched a consultation on legislative changes to achieve the proper balance between executive, judicial and independent responsibilities, improve clarity, transparency and openness in processes; create a more diverse judiciary that is reflective of
	society; and deliver speed and quality of service to applicants, the courts and tribunals and value for money to the taxpayer.
	A number of our proposals give effect to recommendations arising from the report of the advisory panel on judicial diversity. Others come from the judiciary and those with a close interest in the appointment process.
	I have formally submitted the consultation to the chair of the House of Lords Constitution Committee as part of our contribution to their ongoing inquiry into judicial appointments and diversity. The Government intend to consider the Committee’s findings alongside responses to this consultation.
	The closing date for comments will be 13 February 2012.
	It is available online at: http://www.justice.gov.uk/consultations.

TRANSPORT

Airport Security Scanners

Justine Greening: On Christmas day 2009 an attempted attack on Northwest flight 253 from Amsterdam Schiphol to Detroit was made using an explosive device concealed in the underwear of a passenger. The device had been constructed with the aim of making detection by existing screening methods extremely difficult and had not been picked up by airport security at any point throughout the passenger’s journey.
	The previous Government’s response to this threat included introducing security scanners at UK airports. Security scanners were deployed at Heathrow and Manchester airports in February 2010. They were deployed at Gatwick airport a few months later, meaning that today scanners are in operation at three of the largest UK airports.
	A public consultation on an interim code of practice for the use of security scanners began just before the general election. After the election, my predecessor, the right hon. Member for Runnymede and Weybridge (Mr Hammond) extended the consultation to allow more time for people to respond. The consultation closed on 19 July 2010 and over 6,000 responses were received. These have been analysed and I can now announce how we intend to deploy security scanners in the future.
	The overwhelming feedback from airports is that nearly all passengers accept the use of security scanners and find the process quick and convenient. Out of over a million scans the Government are aware of only 12 refusals. However, I recognise that some passengers have concerns about the use of security scanners and these concerns were reflected in the responses to the consultation.
	The ways in which security scanners can be deployed have been restricted by European legislation. My predecessor asked the Transport Commissioner to bring forward proposals which relax these restrictions, and allow scanners to be used more flexibly. An outline package which would achieve this was presented to the European Aviation Security Committee in July and has now been agreed by the European Parliament.
	Most responses to the consultation expressed discomfort with the idea of having an image of their body captured for analysis, and they indicated that—if selected for a security scan—they would prefer to opt for an alternative method of screening. I have considered this carefully. However, I have decided against it, on security, operational and privacy grounds.
	First, I do not believe that a “pat down” search is equivalent in security terms to a security scan. The purpose of introducing security scanners in the first place was to protect the travelling public better against sophisticated terrorist threats: these threats still exist and the required level of security is not achieved by permitting passengers to choose a less effective alternative.
	I have considered carefully whether there are alternative screening methods which might deliver equivalent levels of security to a security scan. A full private search—involving the loosening and/or removal of clothing in the presence of security staff in a private room—would deliver a reasonable level of assurance. However, I believe that this is likely to represent a greater intrusion of privacy than a security scan, and that nearly all passengers, if they fully understand the procedures, would be unlikely to opt for this alternative. It is also likely to be operationally disruptive to airports and other passengers. Appropriately trained security staff would need to be diverted from the main search area to undertake these searches, leading to increased costs and longer queues for everyone else. I do not, therefore, believe that this represents a viable way forward.
	I am aware that the proposals recently agreed by the European Parliament include the right for passengers to request an opt-out from scanning. The UK did not support these proposals when they were presented to the Aviation Security Committee. Given the security arguments against permitting such an opt-out, and the threat level that exists in the UK, the Government intend to use their powers under the Aviation Security Act to maintain the current position. Those passengers selected for scanning will therefore not be able to fly if they are not willing to be scanned.
	The consultation also asked people whether they had any health concerns relating to the small doses of ionising radiation produced by some security scanners. Only a limited number of responses were received on this issue, but I recognise that it has continued to be a contentious
	issue. Last year, experts from the Health Protection Agency (HPA) conducted an official assessment of the x-ray backscatter scanner in use at some UK airports. The HPA found that the dose of ionising radiation received from deployed backscatter scanners is the equivalent to that received naturally through just two minutes of flying at high altitude.
	The European Commission has called for further expert consideration of the potential health risks from security scanners and has asked the European Scientific Committee on Emerging and Newly Identified Health Risks to review the evidence. I look forward to the Committee’s report and will consider it carefully before making decisions about which technologies should be deployed at UK airports in future.
	However, it is right that the Government does what it can to address people’s concerns wherever that is possible without compromising security. Therefore I can announce today that the Government intend to make further improvements to the privacy and data safeguards already in place for security scanners.
	Software which automatically analyses images is currently in development. Where this technology has developed to a stage at which it passes rigorous Government testing, airports will be expected to deploy it when they renew or replace their equipment. This will mean that in the future images will no longer be seen by human reviewers. In addition, airports will also be required to undertake routine testing of hardware and software to ensure that they remain unable to copy, save, or otherwise transmit images. This will be verified by the Department’s transport security inspectors.
	I have also been considering whether security scanners should be rolled out more widely at UK airports. In principle, I believe that they should. My officials will work with the aviation industry to agree a risk-based approach to further deployments. However, I want to make sure that this is done in conjunction with the availability of enhanced screening technology with better privacy safeguards. The precise timing of further deployments will therefore be dependent on how quickly the new generation of security scanners is developed.
	I have placed a copy of this statement, and the revised regulations on the use of security scanners at UK airports, in the Libraries of both Houses.